Electric utilities and policymakers in Japan and Germany have been scrambling for months to find ways to compensate for nuclear power plants shut down in the aftermath of Fukushima. In both instances, fossil fuels are part of the stopgap solution to offset the declines in nuclear generation in the short term, but longer-term energy policies are shifting definitively toward efficiency and renewables. Now, the unexpected and indefinite shutdown of both units at the San Onofre Nuclear Generating Station in Southern California has raised questions about California’s short-term electricity supply options and long-term contingency plans.
Not surprisingly, efficiency, demand response, and renewables could play a key role in helping to diversify and mitigate risks for Southern California’s electricity supply future. The solutions being pioneered in these three markets, while driven by different circumstances, all take advantage new smart grid technologies to manage and integrate distributed resources.
In Japan, only one of the 54 commercial nuclear reactors that supplied 30 percent of the nation’s electric power prior to the Fukushima disaster is currently operating. It, too, is scheduled to shut down for scheduled maintenance on May 5, leaving the country with no power supplies from nuclear plants for the first time in more than four decades.
Japan’s central government is now seeking to win agreement from local authorities in Fukui prefecture to restart two nuclear reactors operated by Kansai Electric Power Co., but whether and when these reactors might actually be allowed restart remains uncertain.
These unprecedented circumstances raise the possibility of economically damaging power shortages as demand increases during Japan’s hot summer months. Kansai Electric, which depended on nuclear for 49 percent of its generating capacity, has warned that its power supply capacity could fall short of peak demand by as much as 18 percent this summer if none of its reactors are allowed to restart. And while Kansai’s service territory is geographically small, its annual economic output is worth more than $1 trillion.
The principal short-term solutions to the crisis have been emergency demand curtailments and heavy use of imported oil and natural gas in existing thermal power plants, a major factor behind Japan’s trade deficit in fiscal 2011, the first in more than three decades. The International Energy Agency projects that in 2012 Japan’s electric utilities will burn 300,000 barrels per day more oil and 23 billion cubic meters more liquefied natural gas to make up the generation deficit if none of the shut down nuclear reactors is allowed to restart.
The upshot of these events is an intensified focus on energy efficiency and renewables, two solutions that hold promise of bridging the supply-demand gap in the years ahead while simultaneously reducing the current heavy reliance on fossil fueled generation. Under its pre-Fukushima energy policy, Japan had set a goal of increasing renewables from 9 percent of power supply in 2008 to 21 percent by 2030. But an assessment released last year by the Ministry of Environment suggested that Japan could shift even more dramatically toward renewables. Already, major Japanese companies—including Mitsubishi Heavy Industries, Toshiba, Hitachi, and Softbank—have announced plans to build hundreds of megawatts of new solar and wind projects.
At the same time, new investments in smart grid technologies to manage demand and integrate renewable power supplies into the grid are increasing rapidly. Hitachi, Panasonic, Toshiba, Fuji Electric, and Mitsui are among the major companies working to implement new energy management technologies, including pioneering experiments in integrated neighborhood technologies. Accelerated investment in these technologies by Japan’s most powerful technology companies will have global consequences as new products and service models come to market.
Halfway around the world, Germany’s electric power sector is turning to similar solutions in the aftermath of Fukushima. Within months of the Fukushima disaster, Germany revoked the operating licenses of seven of its 17 nuclear power plants and subsequently voted to exit nuclear power altogether by 2022. Germany now plans to get 35 percent of its power from renewables by 2020 and has committed to reaching 80 percent by 2050. The shift to higher shares of variable renewable generation will require parallel investments in efficiency, demand response, and better grid controls to help integrate high levels of variable renewable supplies.
Already, Germany’s largest electric utilities, EON and RWE, are increasing their investments in solar and wind energy to offset nuclear power supplies. Earlier this year, RWE began operating the first commercial scale virtual power plant, weaving together the operations of dozens of green energy sources in order to be able to bid up to 80 megawatts of power supply into the European Power Exchange. The changes already unfolding in Germany foretell the demise of baseload generation, together with increased needs for flexible, dispatchable supply- and demand-side resources.
Do the events in Japan and Germany have relevance to the United States? The answer is yes, and potentially sooner than almost anyone expected. The San Onofre plant is closed because of unusual and excessive wear in hundreds of tubes in the plants’ steam generator units, raising questions about the integrity of the steam generators installed by Southern California Edison (SCE) in 2009 and 2010.
The problems at the plants raise the possibility that California could face power supply challenges this summer not unlike those facing parts of Japan and Germany. San Onofre plays a critical role in Southern California’s electricity grid, so finding short-term solutions will be challenging. California’s policymakers, utilities, and grid operators are hurrying to create contingency plans to reduce demand and ramp up generation from gas-fired power plants and other interim supply sources to meet peak summer demands. Perhaps more importantly, however, even if the problems with San Onofre’s steam generators are overcome, the current troubles could increase the likelihood that SCE will face difficult challenges to relicensing the plant in 2022 for another 20 years of operation. Could efficiency and renewables make up the difference if San Onofre were to go out of service in 2022?
To explore answers to this question, RMI, in collaboration with Energy and Environmental Economics (E3), is studying long-term scenarios for Southern California’s electricity future using models developed on for the California Public Utilities Commission. These scenarios explore pathways to achieve up to 50 percent renewable electricity supply by 2030 with and without nuclear power in the supply mix. Results of the study will be released in June.